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Jan 13

A transaction

Fortune Magazine: Why SurveyMonkey is holding off on an IPO

NY Times: SurveyMonkey Raises Nearly $800 Million While Staying Private

AllThingsD: SurveyMonkey Raises $800 Million in Debt and Equity for Tender Offer — Including New Investment From Google’s New Late-Stage Unit

Forbes: SurveyMonkey To Raise $794M In Recap; Valuation $1.35 Billion

From the Fortune article:

“I took my first company public and worked at Yahoo (YHOO) for seven years, and I saw plenty of decisions made because of what it would do to the stock price that week,” he says. One of Silicon Valley’s best networked (and well liked) executives, Goldberg also witnessed up close last year’s most tumultuous IPO, the still-underwater debut of Facebook (FB), where his wife, Sheryl Sandberg, is chief operating officer. “There are lots of good reasons for going public,” says Goldberg, ticking off growth capital, brand recognition and credibility with business customers as chief examples. “We just don’t have any of them.”

And yet, SurveyMonkey—which offers cheap, easy-to-use online surveys—has two reasons for raising capital. One is to reward the investment firms, Spectrum Equity and Bain Capital, that bought the company just over four years ago, when it was about a fourth its current size. The other is the perennial tech-industry rationale for an IPO: so SurveyMonkey’s employees can sell some of the stock that is a significant portion of their compensation.

Then there is the fact that SurveyMonkey undoubtedly could go public. Its revenues, $113 million last year, are growing at a 40%-plus clip. Earnings (less interest expense, taxes and depreciation and amortization) were $61 million, a software-like margin of 54%. Its “freemium” model—new users pay nothing, though significant numbers convert to paying accounts—encourages consistent growth because its sucks in customers slowly. The company has 2 million active users, about 360,000 of whom pay in the neighborhood of $200 to $300 a year for enhanced survey features.

And so, rather than go public now, Goldberg plans to raise nearly $800 million in equity and, in a rare move for a rapidly growing Web company, debt. Tiger Global Management and Google (GOOG) invested in the $444 million equity round SurveyMonkey closed in December. (Goldberg and Sandberg are investing as well, accounting for $50 million of the equity financing.) Other new equity investors include Iconiq Capital, the money-management firm that handles the personal wealth of several top Facebook executives; Social + Capital Partnership, a venture firm associated with prominent Facebook alumni; and Laurel Crown Partners, a venture and private-equity firm in Los Angeles. The new financing—a recapitalization in Wall Street jargon—values SurveyMonkey at $1.35 billion.

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